Franchising is a business relationship in which a company (franchisor) gives a franchisee the right to use its trade name to distribute and sell its products.
A signed agreement governs the operations of the franchise. It is an excellent way of expanding an already-existing business. Besides starting a business from scratch, those who opt for self-employment have the option of buying a franchise.
Advantages of Buying a franchise
It is a convenient way for new entrepreneurs to venture into the business world.bStarting a business needs an incredibly unique idea. For it to be successful, you will need to either come up with a new product or service or offer the existing ones in a way that is different from others.
Consumers need a reason to leave other sellers and buy from you. With a franchise, you have the advantage of dealing with a brand that has built a name for itself. In most cases, you simply bring existing products closer to consumers.
It allows you to enjoy the freedom of owning a small business. What’s more, you have the support of a large company. It is therefore stable, with higher chances of success.
It costs less.
Buying a franchise costs less than starting a new business. It also calls for less effort. All you need is to identify the franchisor, agree on the terms and price and you are good to go. You are more likely to start receiving profits earlier than one who starts a business.
The company has established an excellent image
The franchisor uses the professional advertising and marketing tools required. Besides, it has already built a customer base. Therefore, it will be easier for you to get find a market for the products you sell.
Most franchisors offer training programs for new franchisees. You get the opportunity to learn how to operate your business successfully. You can apply this knowledge to other businesses as well.
Renewal of agreement
Once the agreed period of operation expires, you can renew it. You can also fail to restore it and try new ventures. At that time, you have the freedom to do whatever you want.
Disadvantages of Buying a Franchise
The way you run your business is dictated by a formal agreement between you and the franchisor. Therefore, your creativity in the market is limited. It also limits the products you deal with in your business.
The bad performances by other franchisees affect your reputation.
Change of direction
Change of the franchisor’s ownership or management could lead to termination of the agreement.
Percentage of profits
A portion of your profit goes to your franchisor.
Starting a franchise
As said before, this process is easier than starting a new business. All you need to do is identify the franchisor, contact him and sign the agreement. You should sign it only if you are comfortable with the terms. Acquire the capital and assets you need and start operations. It is that easy!
If you are thinking of being self-employed, buying a franchise is one of the easiest ways to start. Besides, starting one is more comfortable than establishing a new business. As long as you stick to the terms of your agreement, you will be enjoying the profits within a short time.
That is all you need to know about buying and starting a franchise. Do not keep this information to yourself. Show your family and friends you care by sharing this article through Facebook and other social media sites. They will thank you for it.
- Joel Libava
- Publisher: Wiley
- Edition no. 1 (12/06/2011)
- Rick Grossmann
- Entrepreneur Press
- Kindle Edition
- Michael E. Gerber
- Publisher: Picnic Time
Last update on 2019-05-31 / Affiliate links / Images from Amazon Product Advertising API